Earnings Call Transcript - XNSE:SHILPAMED 2026-11-05

Operator

Ladies and gentlemen, good day, and welcome to the Shilpa Medicare Limited Q2 FY27 results conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions at the end of today's presentation. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Monish Shah from Shilpa Medicare. Thank you, and over to you, sir.

Monisha, Head of Investor Relations

Thank you, Sam. Good evening, and welcome to our quarter two and first half financial year FI27 results call. Today, from the management, we have with us Mr. Keshav Bhutada, Executive Director and CEO of Shilpa Pharma Life Sciences, and Mr. Alpesh Dalal, our CFO. The financial results and presentations are uploaded on the stock exchanges, and the transcripts, along with the audio, will be available on the website of the company and also on the stock exchanges. Please note today's discussion might include certain forward-looking statements based on current expectations and assumptions. These statements are subject to risk and uncertainties that could cause the actual results to differ materially. The company undertakes no obligation to publicly update or revise any forward-looking statements. With that, I would like to hand the call over to Mr. Keshav for his opening remarks. Thank you, and over to you, Keshav.

Keshav Butada, CEO

Good evening, everyone. I want to start not with the quarter numbers. We will get to those, and they are the best in our history. But inform all our investors the hardest years, the years of investing ahead of revenue are behind us. The years of harvesting are beginning. Shilpa is not built to compete on price alone. We are built to compete on difficulty, complexity of the molecule. Over years, we have continued our investment in four engines, API, CDMO, formulation, and biologics, and today all four engines have started firing. For second quarter, we posted our highest ever revenue and highest ever EBITDA, backed by the growth in all four business segments. I would like to reiterate on the operational leverage, which I also mentioned in the previous quarter. Still, our big bets on CDMO, Biologics, and NB are under monetization, and as and when plant and capacity get filled up, our ROC will improve. With that, I would like to start briefing you segment by segment. First, I will start briefing with API business. In API, I am happy to inform that we delivered highest ever quarterly revenue in our history, and we remain confident on continuing momentum in upcoming quarters. In total, we have 25 plus NC CDMO client programs, in which we expect 4 programs to commercialize in next 18 to 24 months of our partners. We remain on track to complete more than 15 new oncology generic products in FY27. On Ceptic's front, we are on track to commission one of the largest peptide manufacturing integrated capacity by end of FY27. And going forward, our focus will continue to remain on high gross margin business, mainly peptide, oncology, APIs, and CDMO. With that, I will start briefing on formulation division. In formulation division, we grew more than 50% year on year. Our India business grew 2.5 times H1 YOY basis, led by Nor UDCA, a novel first-in-class treatment for NA FLD. And we are proud to be a company first time in the world to launch this in patients. Now, it has been a year of launch and we have had zero recalls on the product and we have seen some excellent results in the patients. We are also working on extrapolating this product into additional indications which will help us in growing this product in years to come. Complex 55B2 products in formulation division currently are commercialized, and we have almost five plus complex 55B2s which are under advanced stages of development, which we will be commercializing in next two to three years. Three important upcoming launches in Fi28, Enzalutamide, Abrexin, and Rotigodin patch are on track for Fi28 launch, and we remain confident with With the launch of all these three products, we can have good growth. In current quarter, we have completed semaglutide GLP-1 oral tablet EB batches or injectable EB batches, and we are on track to submit in Europe and ROW markets. Also, apart from that, one of the complex trans-germal patch products, which we have already partnered for Europe market, we have completed exhibit batches in current quarter, and we are planning to file this product in FY28. Apart from above, we have strong, complex, and differentiated pipeline, and details are already given in investor presentation. On Unisyship Therapeutics, where Shilpa is having exclusive integrated API and formulation manufacturing partnership, Our partner has already filed the NDA with one more additional site, and he has received a revised Padufa date of March 2027. Now, coming to Biologics Division. Biologics is now a real business focus and no longer an asset under monetization. It contributes today 12% of our revenue with portfolio of 7 biosimilars whose molecule's average sales is more than US$10 billion in global sales. In FY27, two of our biosimilars will be entering into human studies for Europe and ROW market with molecule having global market of more than 10 billion in sales. We have strong opportunity to out-license all seven active biosimilar to license in global markets in years to come. On new biological entity partnership programs with Alveolus Bio and Map3 Biologics, which is already given in the investor presentation, both the programs will be entering into Phase I human studies in FY27, which is one of the very important milestones for us in our new biological entity journey. CDMO will be remaining one of our strongest and fastest growing segment in biologics and it has a strong future growth opportunity. With current 6 plus active programs in which phase 1 supplies for 3 biologics programs for our client will complete in FY27. Our first ADC biosimilar will also enter human studies in FY28. With cumulative mix of Biosimilar, CDMO, and NB Biologics, we are confident to continue to grow in our biologics journey. Coming to Recombinant Human Albumin, which is a new biological entity, first-in-class program developed by Shilpa. Our global phase 3 protocol was approved by CDSCO and EMA, and we are targeting IMPD submission in Europe in second half of FI27. So let me sum up the case in one sentence. Shilpa today is a profitable, deleveraged, multi-engine, specialty pharma company sitting on built capacity with a dense pipeline of differentiated launchers in front of it. And we as a company remain confident on monetizing all our investments. Thank you.

Alpej Dalal, CFO

Good morning, everyone. Alpesh Alal here, and a warm welcome to all of you to our second quarter Financial 27 results call. Let me briefly take you through the financial performance of the company. I'm pleased to report that we have delivered our highest ever quarterly revenues with quarterly revenues of Rs. 538 crore, reflecting a robust growth of 35% year And revenue for the first half were 1,007 crores, growing at 44% year-on-year. This is the first time in our history that our half-yearly revenues have crossed 1,000 crore mark, and this performance was driven by strong performance across all our verticals. Alongside record revenue, we also reported our highest ever quarterly EBITDA. Our operating PBT, which is before share of profit from JVs and Associates, and before exceptional items, was 104 crores for the quarter and 202 crores for the half year. Pat for the quarter was 79 crores and 180 crores for the first half of FY27. This reflects a growth of nearly 100% compared to the previous year's first half. On the capex front, we have spent Rs 252 crores in the first half of FY27, and this capex This is primarily funded by our internal accruals. A few highlights on the balance sheet front. Our net debt stands at Rs. 612 crore, which has remained stable despite significant increase in the CAPEX program. And our improved performance and positive operating leverage have also helped in improving our return ratios, with ROCE improving meaningfully to 13.3 percent, up from 9 percent in FY25. On an adjusted basis, this ROC stood at 18.3%. And with improvement in business mix and higher operating leverage, we expect the ROC to improve further in the coming quarters. Let me now walk you through the segmental performance. Our non-captive API business clocked the revenue of 255 crores for the quarter growing at 24% year-on-year. And it was 470 crores for the first half of 27. A growth of 20% year-on-year. The growth was on account of improved off-type of E-Products from our newly expanded capacities, coupled with steady performance in the specialty CDMO segment. Our formulation revenues were Rs. 210 crores, growing over 50% year-on-year for the quarter, and Rs. 407 crore for the first half of FI27, a growth of 70% year-on-year. Excluding licensing income, the base business reported robust revenue growth of 87% in the quarter. Largely driven by complex finished rosage formulation portfolio in the EU region supported by the U.S. and ROW regions. In the economic segment, the revenues were Rs.75 crores, growing at 150% year-on-year for the quarter, and Rs.117 crores for the first half of FI27, growing at 92% year-on-year. This strong growth was driven by continued deal momentum towards licensing and partnership and CDMO businesses. With that brief introduction, I would now like to open the forum for Q&A.

Operator

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star, then 1 on the touchstone phone. Participants are requested to use only handsets while asking a question. The first question comes from the line of Part Mehta from Valium Capital. Please go ahead. Hi team, congratulations on the good set of numbers.

Speaker 12

My first question was on the cross margins that sequentially and wire-wise there has been around 700 bits of decline in the cross margins. So, how much of this, you know,

Operator

we would have been able to pass on the cost and what is exactly that has led to the decline in the margins?

Keshav Butada, CEO

Yeah, thanks, Pat. So, on the gross margins, right, basically, if you see for the quarter, API also has had a very strong performance. So, when we have very big performance in API, when you compare API to formulation business, the gross margin in formulation business are much higher. That has led to a small decline in the gross margins.

Manish Fandari, Analyst

Hi, Keshav, this is Manish Fandari. Congratulations on the number, and also you insisted quite a lot on the multi-engine. I'm so glad to hear that. Keshav, my question is related to one news item on the expansion in the peptide business, a capex, which I read in Economic Times. So, is there anything which you can share about this with us?

Keshav Butada, CEO

Yeah, thank you. Thanks for your question. See, on Peptide, I think as a company also, I have mentioned in previous investor calls also, we as a company are very focused on the Peptide, and we have been working in Peptide segment for quite a long time, and seeing the upcoming opportunities in Peptide in the GLP-1 space, in the CDMO space, in the CDMO HP API space, Today, we have four manufacturing lines in peptide, and we are adding additional two manufacturing lines, and we are also keeping space for further expansion based on the business progress, okay? So, overall, peptide will remain our focus, and as I have already explained in my commentary also, currently, our first set of expansion where we are building one of the largest peptide manufacturing capacities of India, that will be commissioned by end of FY27.

Manish Fandari, Analyst

And my last question is related to the albumin. Your tentative dates would be FY29 versus FY30. So, I'm struggling to get what should be the tentative range of size of revenues one should look forward. In 29, maybe release or 30, the first year of operation on the existing base to the full potential.

Alpej Dalal, CFO

Manish, unfortunately, we do not provide any, you know, revenue guidance or any revenue, you know, indication. The program is, you know, well on its way, and it's a fairly decent opportunity that, you know, we are seeing. As in when we reach those milestones, I think it would be much better to discuss at that point in time.

Manish Fandari, Analyst

Sure. I appreciate that. Thank you.

Operator

Thank you. The next question is from the line of Gaurav Shokla. Please go ahead. I'm audible, sir. Yes, Mr. Shokla, you're audible. Please go.

Gaurav Shokla, Analyst

Thank you, sir, for giving me chance and congratulations for very good set of numbers. Sir, I want to ask about what is the planned manufacturing capacity for peptide and what utilization level does management expect over the next two years?

Keshav Butada, CEO

Thanks, Gora, for your query. See, on the manufacturing capacity, what we are building, it can manufacture peptides at a tonnage capacity, yearly tonnage volume, okay? And coming to how much utilization will happen, see, it depends purely on our customer's uptake. So, it will not be a right time for me to comment, but in the next year, second half, right, I think that will be a right time for me to comment on that. But we have some visibility of programs which where we are confident that there will be requirement of some volumes. So, accordingly, the capacities are planned.

Gaurav Shokla, Analyst

Okay, sir, and our four bio-similar programs, Nivolumab, and Premo, Lijomab, and Darta, which are closest to regulator approval?

Keshav Butada, CEO

Nivolumab.

Gaurav Shokla, Analyst

And when time, time, and any?

Keshav Butada, CEO

So, there are two different things. See, when it comes to India market, already we have one biosimilar in end market, which is Adalimumab. Our second product, Aflibersep, will be in the market in FY27. Coming to export market, which is Europe and ROW market, there our first product will be Nivolumab. And the Nivolumab product, we are planning to file in Europe market in next year.

Gaurav Shokla, Analyst

Next year. Thank you, sir. Thanks a lot, sir.

Keshav Butada, CEO

Thank you.

Operator

Thank you. A reminder to participants to limit their questions to two per participant. The next question is from the line of Srikant Akolkar from Nuwama. Please go ahead.

Speaker 9

Hi, good afternoon, and thanks for taking my question. I have a question on peptides. So you have said that you have got the order book visibility. Is it possible for the company to take a moment and talk about the capacity in terms of gross block or maybe the kiloliters that we have put in? And then when we say that we have got revenue visibility in F27, what kind of opportunities are these? Is it a generic opportunity? You also said semaglutide DMF has been filed. So, is it semaglutide or innovative products? That will be the first question.

Keshav Butada, CEO

Shrikant, thanks for your question. I think the peptide capacity what we are building is for mix of CDMO and GLP-1 and HP API. It's a mix of all. So what opportunity will translate into what value, I think that is something which I already mentioned will be told in next year's second half. But I can tell you it's one of the largest peptide capacities which we are trying to build.

Speaker 9

Understood. And when we say that we would order visibility, then how many peptide projects we have? How many of them will be commercial next year? Anything on that?

Keshav Butada, CEO

So as I already mentioned, I did not say that we have already orders in hand, but yeah, there is an indication from the customer according to which we have planned this capacity. And how much of this will translate into actual order and how much will be in the actual business, we will be able to give you more visibility next year.

Speaker 9

Understood. Understood, no problem. And now on the CDMO side, we've got six late-stage programs, and the presentation says that we also are going to start supplies in Europe in the second half. So, how should we think of the CDMO prospects and equity? Anything on that? Additionally, is it possible to give some description of the late-stage programs that we want to do?

Keshav Butada, CEO

Yes, we are very bullish on CDMO as a segment, and of the total, currently, we have clearly mentioned in the investor presentation, we have four programs in late stage, okay, under registration. And two programs in phase 3 of our partners. And of the four late-stage programs, we expect next year at least one of them to get commercialized. And subsequent year, three of them to get commercialized. And each of them has a very significant opportunity for us because of the total four programs, three of the programs we are supplying API to our end customers. Which will be a big part of their overall purchasing for the product.

Speaker 9

Okay. And lastly, on recombinant albumin, I know we are going to start phase three, but just a different question. We are also providing sample of recombinant albumin for some of our clients who probably can become our client for non-therapeutic usage of the albumin. So, can you please talk about what kind of opportunity would this open up and what could be the timeline for this?

Keshav Butada, CEO

So, Shrikan, see, this excipient opportunity is a very long opportunity, and currently, we are in very early stage of development with our customers. So, I think here, the more visibility on the revenue, how much it will scale to, we will have more visibility in the next two years. So, I think maybe in FY28 sometime, we will be able to give more clear visibility on this.

Speaker 9

Oh, understood. No problem.

Operator

Thank you so much.

Keshav Butada, CEO

Thank you.

Operator

Thank you. The next question is from the line of Krisha Kansara from Boring EMC. Please go ahead.

Krisha Kansara, Analyst — Boring EMC

Hi, N.O.I. autism.

Operator

Yes, you're audible. Please go ahead.

Krisha Kansara, Analyst — Boring EMC

Yeah. Yeah, thank you. First of all, many congratulations to the entire team on a very good set of numbers. My first question is on the newly launched Shilpa CDMO platform. Could you walk us through the rationale behind, you know, carving out a dedicated CDMO platform from the API business? Also, it would be... Helpful if you can specifically highlight certain milestones which the CDMO business has achieved over, let's say, past few years, which has given us the confidence to set it up as a standalone platform. I'm asking this question more from a business standpoint and what Chilpa brings to the table. I'm expecting a more of a qualitative answer. Thank you. I have another question.

Keshav Butada, CEO

Yeah, Krisha, see, I think if you see we as a company, we are a very integrated and one-stop solution if any partner programs come. And over years, among all our investment, if you see the kind of investments we have done, API, if we do, we do starting from KSM to final API. When we talk about peptide, we do amino acids, we do fermentation, and then we do final API. When we talk about biologic clone development to fill finish, when we talk about ADC, we make our own payload, linker, antibody, and conjugation. So, overall, when we are a one-stop solution for any of the partner, right, there are high chances of winning some good programs in every year. And if you see overall our journey, today we have more than 25 plus CDMO programs with our partner, which we have already given details in the investor presentation also. And we have tried this time to also mention how many of these are late stage, where at least we know that these are the products which are under registration, so that the more visibility can be given to the other investors.

Krisha Kansara, Analyst — Boring EMC

Okay, so is it fair to assume that this platform was cowed out in order to, you know, pitch ourselves in a better way to the CDM applying?

Keshav Butada, CEO

Yes, you are right.

Krisha Kansara, Analyst — Boring EMC

Okay, okay. And the 15 million website investment that you announced recently, so it is spread over how many years?

Keshav Butada, CEO

So, Krisha, it is all phased investment. It will all depend on our partner and our program uptake and everything. So, this is something which will all depend on the kind of utilization which will happen in our current investment which is already done. If there we have good utilization, then the further investments will be planned.

Krisha Kansara, Analyst — Boring EMC

Okay. Okay. And just one last question on Nuncetron. So, firstly, congratulations on the SEC approval. My question is, how is the launch progressing and, you know, who are the marketing partners that we have tied up with? If you can provide some insights into the launch strategy, that would be helpful. Thank you.

Keshav Butada, CEO

Yeah, so, Krisha, on Ondan Setron, once in India, once we get central approval, there are many procedures which we have to do. State approvals and license and permissions. So, we expect the Ondan Setron launch to happen in FY28, first half.

Krisha Kansara, Analyst — Boring EMC

Right. The discussions have started with the marketing partners.

Keshav Butada, CEO

Yes.

Krisha Kansara, Analyst — Boring EMC

Okay. Okay. Thank you.

Keshav Butada, CEO

Thank you.

Operator

Thank you. The next question is from the line of Aryan Mehta from Shravas Capital. Please go ahead.

Speaker 12

Hi, congratulations on the good set. I had a question on the API specialty CDMO. So I think you mentioned there's one commercial NC that you're already supplying. So can you talk a little bit more about this, what kind of therapy area and how should we look at the revenue ramp over the next couple of years? And also on the same segment, the two Japanese programs. So what stage it is and when will the commercial supply start?

Keshav Butada, CEO

So, Aryan, I think on the first question, what is the program, for what indication and all, we are under confidentiality with our partners. So, I will not be able to disclose more on that. But that's the NCE program, which our partner launched very recently, one year ago. And slowly, year on year, the volumes will grow. I think that is what we have current understanding. And on the Japanese program, yes, there are, as we have already mentioned in the investor presentation, we have some Japanese EDMO programs also. Where we are currently manufacturing or supplying to our partner the registration batches quantities.

Speaker 12

Sure, thanks. So, how should we look at the growth in specialty CDMO? Because there's this commercial NC, there's Japanese programs, and then you also have a few launches next year. So, what kind of growth can we expect from this segment?

Keshav Butada, CEO

So, Aryan, it will all depend on our partners and their uptake on every year, but what I can tell you is by seeing the kind of programs we have and the kind of complexity where we have developed these programs for our partners, we have good growth possibility in every year, but how much it will be, I think that we don't give any forward-looking statements, so that I think I will not be able to tell you.

Speaker 12

Sure, sure. And lastly, on the biologics, so how should we look at this? So this quarter was a really good number. So how should we look at this? So how much would be like a one-time milestone thing or licensing income and TDMO? So just trying to understand how sustainable this kind of growth is.

Keshav Butada, CEO

See, Biologics, I think I have also mentioned in the previous investor calls also. Biologics is something where we have been investing over years a lot. And it is now a right time for us to actually see the light in the end market. And today we have only Adalimumab in the end market, which is commercially supplied. So every quarter, I think you will see a mix of CDMO revenue, biosimilar revenue, licensing revenue, all of that coming in. So, we remain bullish on Biologics as a segment.

Speaker 12

Thank you, and all the best.

Keshav Butada, CEO

Yeah, thank you.

Operator

Thank you. The next question is from the line of Atul Joby from Prosperity-Wealth. Please go ahead. Yeah, thank you for the opportunity.

Speaker 9

Firstly, how many new molecules are you planning to commercialize in the next 12 to 18 months? Also, can you give some idea on the potential opportunity size of this molecule? Is it of similar size to more ADPA or bigger?

Keshav Butada, CEO

Yeah, I think we have clearly mentioned these details in our investor presentation in every segment wise. We have clearly mentioned each product, what is the status and when we are planning to launch. And also if you see our investor presentation, we have mentioned one dedicated slide segment wise where we have summarized the near term opportunities. I think if you go through it, you will get a very fair understanding.

Speaker 9

Okay, like, can you qualitatively comment on the opportunity size of the molecules, like, compared to Nord-UDS-A, is it bigger?

Alpej Dalal, CFO

So, basically, you know, as we have been mentioning, we do not provide any specific guidance per se, but as Kesho mentioned, that, you know, if you look at the overall, what we believe, where the opportunity lies, in which products, in which segment, that has been called out in the presentation, and we would urge you to go through the same. If there are any following questions, you can then reach out to Monish separately.

Operator

Okay. Thank you. Thank you. The next question is from the line of Bhavika Singhvi. Please go ahead.

Krisha Kansara, Analyst — Boring EMC

Yeah, am I audible?

Operator

Bhavika, you are audible. However, there is a lot of background noise from your line.

Bhavika Singhvi, Analyst — Nivishe

Yeah, so basically, as you mentioned that we are in the line to do the peptide KPIX, and as per the news, like, it is going to be around 4.50. So, just wanted an understanding, like, how much KPIX we have already done on the peptide site, and what are our current utilization in that, and also, like, even though you can't give visibility right now, but in terms of asset done, How we see the peptide business going forward?

Speaker 6

Yeah, I think we lost you, Bhavika.

Keshav Butada, CEO

Moderator, you can hear us?

Operator

Yes, sir, we can hear you. Bhavika, are you able to hear us?

Keshav Butada, CEO

I think we have lost the line. Maybe you can get her back on cue, yeah.

Operator

Sure, sir. We'll move on to the next question. The next question is from the line of Amish Kanani. Please go ahead.

Amish Kanani, Analyst — Novice Investment Managers

Yeah, hi, sir. Congrats on a good set of numbers. Sir, you know, all the products-wise, you know, very detailed, you know, update in the presentation. So, if you can just give us some sensor of our planned preparedness, you know, whether, you know, one, you know, one of the units is ready, you know, for the approval. And if you can also remind us of, you know, USFTA, you know, status, you know, what is the status there, if you can remind us that, because the only risk that I see is, you know, if there are some regulatory, you know, adverse things that may happen on some of our plants. So how well are we prepared from a plant perspective, you know, and approval perspective.

Keshav Butada, CEO

So, yeah, Amish, thanks for your question. See, I think first question on the regulatory status of Jarchella with U.S. FDA. I think we have already mentioned in my previous calls also, anything on U.S., our majorly, we are getting it currently manufactured in contract manufacturing side because every year we will have hardly two to three U.S. new products for registration batches or for commercial launch. That will remain our strategy going forward currently. And coming to current status with USFDA with Jarchella, there we have submitted, we are working with USFDA on the remediation measures, but that doesn't have any impact on our revenues or on our business plan for next two to three years. I think that is our current status.

Alpej Dalal, CFO

That's right. So there is zero risk to the revenue that we currently have. But I would also like to, you know, highlight that apart from USFDA, all the other regulatory approvals we are regularly getting through. Recently, you know, the plant was re-inspected by EU authorities and they have cleared it again. So there are no risks that we see to our revenues from Jachalra plant. As Keshav was mentioning, as far as the U.S. business is concerned, we have moved most of our critical filings to alternate sites, to our CMO partners. So, again, we do not see any risk over there.

Amish Kanani, Analyst — Novice Investment Managers

Okay. And this bio-objects plant at Darwad, that is ready and approved, right? And fermentation unit, you mentioned, is sorted ready. So, we should assume that it will be on track for... The product launches as and when required, right?

Keshav Butada, CEO

Yes.

Amish Kanani, Analyst — Novice Investment Managers

Okay, thanks.

Operator

Thank you. The next question is from the line of Sumit Gupta from Antique. Please go ahead. Yes, Mr. Gupta, you're audible. Please go ahead.

Alpej Dalal, CFO

Sumit, you are not very clear, but if I understand correctly, you are asking how much is the oncology growth, right? So, see, basically, you know, since Q1, we have made it clear that we have stopped providing bifurcation between onco, non-onco portfolios and all, and we look at the entire API portfolio for, you know, non-captive purposes as a single block. So, that's something that we will not be able to provide separately.

Sumit Gupta, Analyst — Antique

No, I understand that any broad-line number, if not number, then the political aspect is also fine. How is the trend going on?

Alpej Dalal, CFO

Yeah, so basically, we are seeing decent growth in that portfolio. It's not that, you know, the growth is not there. Obviously, because of the, you know, the number of molecules which are there in a specific therapeutic category compared to all the other categories, the growth rate over there is slightly lower than non-oncology, but both the portfolios have been growing fairly well as per our expectation.

Sumit Gupta, Analyst — Antique

Okay, and with respect to overall Asia division, how should we see this standing out over the next two to three quarters, like this trend in QQ, it was just a high contribution. How should we see it?

Keshav Butada, CEO

Sumit, sorry, we cannot hear you. I think there is a lot of background noise. Maybe you... Yes, the voice is a little jumbled up.

Alpej Dalal, CFO

Just go a little slowly, Sumit. Hello. Just go a little slowly.

Operator

Mr. Gupta, please speak a little slower. Yes, please go a little slower.

Sumit Gupta, Analyst — Antique

Is it fine now?

Alpej Dalal, CFO

Yes.

Sumit Gupta, Analyst — Antique

Okay, so I'm asking, I just want to understand the trend of API business over the next 2-3 quarters. How should we see it? The contribution for this quarter was good. So overall, over the next 2-3 quarters or 4 quarters, how should we see it?

Keshav Butada, CEO

So, Sumit, I think as on date, we don't give forward estimates, but the visibility is good.

Sumit Gupta, Analyst — Antique

Okay. And one more question on the Rotigotin part. I think it has been delayed by around, I think it was going to get launched in FAT 27. Now it is moved to FAT 28. So first is, what is the reason for the delay? And second is, will it be launched in FAT 28 or FAT 28?

Keshav Butada, CEO

So Rotigotin as a product, the launch got delayed by a couple of quarters. And the main reason was, there was one variation approval with the European Agency for one of the raw materials. Which took us additional two quarters, but it will, it is set to launch in first half of next year.

Operator

First half. Good. Thank you.

Keshav Butada, CEO

All the best. Thank you.

Operator

Thank you. The next question is from the line of Sheikh Ayaz, an individual investor. Please go ahead.

Sumit Gupta, Analyst — Antique

Thank you very much.

Speaker 13

Actually, the question is answered, but I just want to ask in a different way. How would you see H2 would be compared to H1?

Alpej Dalal, CFO

Sorry, come back. We didn't get your question.

Speaker 13

Can you give us some idea how the H2 of this year would be compared to H1?

Alpej Dalal, CFO

Yeah, so see, basically, you know, Mr. Ayaz, as we have been mentioning, that we do not provide any forward guidance. But I think the way we are seeing the business is that it is on a good traction, and we expect the momentum to continue.

Operator

Okay. Thank you very much.

Alpej Dalal, CFO

Thank you. Thank you, Mr. Rajas.

Operator

Thank you. The next question is from the line of Basant Kumar Bansal. Please go ahead.

Speaker 13

Yeah. Good afternoon to you. My question is extension of this question on growth margin. So, I put it differently. Your raw material cost to silt ratio has gone up by almost 7%. So, it was 28.65% last year, which has now gone up to 35.72%, which has brought down the gross margin. So can you explain that, what is this attributable to, is it one-off, or is it going to be like that only, or are you able to pass it on?

Keshav Butada, CEO

So, I think I mentioned in the previous, sorry, in the call to other members also. See, on the gross margin, your observation is right. The cost has gone up mainly, as I mentioned, because of more API sales. And in API, the raw material costs have gone up globally. So, until the raw material prices will settle down, this will remain to be continued.

Speaker 13

So, you mean to say this is mainly into API segment, the other two segment formulation and PDMO are raw material cost is almost same.

Keshav Butada, CEO

No, we don't give any raw material cost segment-wise, but I have already given you a fair idea.

Speaker 13

Okay, okay. Thank you.

Keshav Butada, CEO

Thank you.

Operator

Thank you. We will now take the last question from Lavleen Bakka from Systematic. Please go ahead.

Bhavika Singhvi, Analyst — Nivishe

Hello.

Operator

Yes, lovely, your audible, please go ahead.

Bhavika Singhvi, Analyst — Nivishe

Okay, yeah, thanks for the opportunity and congratulations on a good set of numbers. So, I have three questions. The first question is, the service and licensing income was quite high this quarter. So, can you please recap as to what proportion will be attributable to licensing income? And is this fair to assume that the gross margin for this income is 100%?

Alpej Dalal, CFO

So, see, basically, you know, for service and license income, there are costs that are incurred. Some of them are ahead of time, you know, because we have developed the product. We do not get those revenues without developing a product. So, there are R&D-related spends that have happened. Maybe, you know, in the past, some of them might also have been in the current period. So, it is not fair to say that, you know, it is 100% or there is no cost attached to it. But is there any cogs that is getting associated to that? Probably not because, you know, those are service incomes that one gets. There is no attached underlying product or anything. So to that extent, it doesn't have any cogs, but it does have certain expenses which are sitting in R&D and other expenses.

Bhavika Singhvi, Analyst — Nivishe

Okay, and can you also tell me that what proportion was attributable to licensing income?

Alpej Dalal, CFO

No, we would not be able to provide that break-up to you, please.

Bhavika Singhvi, Analyst — Nivishe

Okay, so also my second question is Europe's sales was the highest. So, did we book supplies for rotting time patch or it was entirely attributable to melatonin and accident?

Alpej Dalal, CFO

Yeah, so we haven't launched Rotigotin as yet. It has been a continuing business still, whatever was continuing. It's not just two products, but there are other products as well, but Rotigotin has not been launched.

Bhavika Singhvi, Analyst — Nivishe

Can you give some color on any other generic players that have entered the market for Nilotinib and Exitinib?

Keshav Butada, CEO

So, coming to Nilotinib, so Axitinib, see, already when we launched day one, there were other generic players also, okay. So, Axitinib, it was not that we were the only generic player. And coming to Nilotinib, yes, some generic players have started coming in the market. But as I've mentioned in the previous investor calls also, Nilotinib is a tender-based product. And in Europe, some tender span for two years, some for three years, some for one year. So, we don't see currently any big change in numbers because of nilotini generic competition.

Bhavika Singhvi, Analyst — Nivishe

Okay, just one last question. So, your presentation says that you have four molecules under global registration. So, would you be able to share the nature of these opportunities as to which therapies these molecules will cater or the nature of customers?

Keshav Butada, CEO

So, see, on the therapy, we don't disclose, as I mentioned, because these are our partner programs. We are not allowed to disclose any such details. But what I can tell you, the nature of customers are a mix of big pharma and mid-pharma customers.

Bhavika Singhvi, Analyst — Nivishe

Are there any biotechs also?

Keshav Butada, CEO

Yeah, when I say mid-pharma, they are all biotechs, correct?

Bhavika Singhvi, Analyst — Nivishe

Okay. Okay, thank you. Thank you so much.

Keshav Butada, CEO

Thank you. Thank you.

Operator

Thank you. That was the last question. I would now like to hand the conference call over to Mr. Munish. Please go ahead.

Monisha, Head of Investor Relations

Yes, hi. Thank you, everyone, for your time and questions on the call. If any of your questions are unanswered, you can write an email to me. I will respond to that. Thank you.

Operator

Thank you. On behalf of Shilpa Medicare Limited, that concludes this conference call. Thank you for joining us, and we will now disconnect your lines.